There is an immense gap between what Americans are aware of Social Security benefits and what they will end up doing, according to new research from investment group Schroders. The 2025 U.S. Retirement Survey has discovered that 90 percent of employed Americans intend to ignore the most commonly recommended piece of financial advice about taking benefits: waiting until age 70 to secure the biggest monthly checks.
The financial cost to the decision is vast. Studies have discovered that taking Social Security benefits early can cost retirees about $182,000 in lifetime foregone benefits. Despite the enormous possible loss, the overwhelming majority of Americans are electing to take benefits many years earlier, leaving a vast retirement income gap that many do not expect.
Comprehending the basic trade-offs
Social Security allows employees to begin receiving benefits as early as age 62, five years before the current full retirement age of 67. But that earlier benefit comes at a high price. Claiming benefits at age 62 reduces monthly checks by approximately 30 percent, with those reduced payments locked in for the rest of your life.
The reverse is also true. Delaying benefits until age 70 earns an increase of more than 30 percent in monthly payments, which is a huge financial benefit to those who can wait. Money managers have been emphasizing this strategy for years, pointing out that delaying the drawdown of Social Security is one of the surest ways to increase lifetime retirement income.
The reality behind Americans’ choices
The Schroders 1,500-adult poll paints a striking picture of the condition of retirement in America. Only 10 percent of them waited until age 70, and 44 percent claim they’ll file for benefits before full retirement age. The decision is not born of ignorance but is rather a cold monetary reality faced by most employees.
Deb Boyden, Schroders’ head of U.S. defined contribution, described the disconnect. She pointed out that 70 percent of Americans understand that delaying the receipt of Social Security benefits increases the checks. However, in spite of this awareness, hardly anyone is willing to wait. The reason is straightforward: lots of employees require the earnings from Social Security as soon as they retire to cover their minimum expenses.
The retirement savings crisis
One of the main reasons for early Social Security filing is the retirement savings deficit confronting the majority of Americans. Employees reported to Schroders that they feel they need around $5,032 in regular income to live in retirement comfortably, but current retirees earn on average around $3,250 in monthly retirement income. This $1,782 monthly shortfall points out the shortcoming of retirement planning for many Americans.
Recent Goldman Sachs analysis discovered that three-quarters of younger working-class Americans are having difficulty saving for retirement due to basic needs like housing taking a bigger chunk of their income than previous generations. Due to this, many employees consider Social Security as an immediate source of income more than a long-term benefit to be maximized.
Security concerns about the program’s future
The second primary reason Americans plan to claim benefits early is concern with Social Security’s long-term solvency. A number of workers worry that the money may not be there if they wait. This is because of legitimate budgetary pressures faced by the program.
Social Security has a huge fiscal crisis due to an ageing population of Americans, and current payments outstrip the contributions of today’s workers. Without action, the Social Security Board of Trustees projects that the trust funds will be insolvent by 2034. The date of insolvency doesn’t necessarily mean Social Security would cease payments. If the trust funds become insolvent, payments would still be made, but benefits would be reduced by roughly 20 percent.
Looking ahead
Despite these difficulties, legislators have alternatives before them, including raising the wage ceiling on Social Security taxes, which stands at $176,100. Wages earned above this amount are not subject to the payroll tax that finances Social Security. Such policy adjustments could stabilize the program’s long-term solvency.
Meanwhile, the gap between professional advice and on-the-ground employee behavior highlights the acute need for improved retirement planning assistance and answers to address the real financial constraints facing American workers.
